Heat Pump vs Furnace: Install and Running Costs Compared
A gas furnace costs $3,800 to $12,000 installed. A ducted heat pump costs $6,000 to $16,000 and replaces your air conditioner at the same time. The install comparison is straightforward. The running cost comparison depends entirely on your own utility rates, and this page shows you how to run it.
Installed cost, side by side
| System | What it does | Installed range |
|---|---|---|
| Gas furnace only | Heating. You keep or replace the AC separately | $3,800–12,000 |
| Furnace and AC together | Heating and cooling, two machines | $8,000–20,000 |
| Ducted heat pump | Heating and cooling, one machine | $6,000–16,000 |
The comparison people get wrong is the first row against the third. A furnace at $5,000 looks cheaper than a heat pump at $9,000 until you remember the furnace does not cool. If your air conditioner is also near end of life, the honest comparison is the second row against the third, and the heat pump usually wins on installed cost.
Running cost: the calculation nobody does for you
National averages are useless here, because the answer flips depending on the ratio between your electricity price and your gas price. Do this instead.
- Find your rates. Dollars per kilowatt hour and dollars per therm, from your own bills, including delivery charges rather than just the commodity rate.
- Convert to cost per unit of delivered heat. One therm is 100,000 BTU. A furnace at 96% AFUE delivers 96,000 of them. One kilowatt hour is 3,412 BTU, and a heat pump running at a seasonal COP of 3 delivers roughly three times that.
- Compare the two numbers. That ratio, not a national study, tells you which is cheaper in your house.
- Adjust for climate. Heat pump efficiency falls as temperature drops, so in a cold state weight the comparison toward the coldest months rather than the annual average.
Where electricity is cheap relative to gas, the heat pump wins comfortably. Where gas is cheap and winters are severe, a high efficiency furnace still wins, and dual fuel wins more often than either.
The ten year framing
Neither machine is a purchase, both are a decade of bills. Over ten years the variables that matter are installed cost, annual running cost, expected life, and the cost of the equipment you are not buying. A furnace lasts longer on average than a heat pump because it runs for one season rather than two, and that difference belongs in the comparison even though it rarely appears in a sales pitch.
When each one wins
- Heat pump. Your AC is also failing, your electricity is reasonably priced, your climate is mild to moderate, or you want to move off gas.
- Furnace. Severe winters with cheap gas, a young air conditioner you are keeping, or an electrical panel that cannot carry a heat pump without an expensive upgrade.
- Dual fuel. Cold state with existing gas service. The heat pump covers mild weather at low cost and the furnace handles the deep cold. Often the cheapest correct answer and the least frequently quoted.
Common questions
Is a heat pump always more efficient?
More efficient at converting energy to heat, yes, by a wide margin. Cheaper to run, only if your electricity price supports it.
Can I keep my furnace and add a heat pump?
Yes, that is dual fuel, and it is worth asking for a quote on it even if nobody offered.
Does a heat pump replace my air conditioner?
Completely. It is the same machine running in reverse, which is why comparing it to a furnace alone understates its value.
Ranges are triangulated from published 2026 pricing sources and restated to a single scope. See our method page. Last reviewed July 2026.